Thinking about macro

Oaktree Capital/Howard Marks

Repost from 8-6-2021

blindfolded seeker can't see lighted room

“Regular readers of my memos know that Oaktree and I approach macro forecasts with a high degree of skepticism.  In fact, one of the six tenets of Oaktree’s investment philosophy states flatly that we don’t base our investment decisions on macro forecasts.  Oaktree doesn’t employ any economists, and we rarely invite them to our offices to share their views. The reason for this is simple: to use Buffett’s terminology, we’re convinced the macro future isn’t knowable.”

USAGOLD note: Over the past several weeks, the overwhelming emphasis has been on the inflation scenario. Most top analysts believe that it is the clear and present danger to investment markets. A handful of top-notch analysts, though, are not buying into the inflation consensus, and Howard Marks perhaps heads that list. It might surprise you to know, however, that he does not deny the possibility of inflation. He is simply saying that the future is unknowable, i.e., “there’s no such thing as ‘knowing’ what the outcome will be.” In our view, that, all being said, elevates the importance of gold in the portfolio. It covers more bases, more possibilities, more contingencies – i.e, the unknowable – better than any other asset we can name.

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